In recent years, the adjustment of the global economic landscape and geopolitical changes have prompted the German government to pursue a strategy of economic diversification aimed at reducing dependence on a single market, especially China. However, data show that German investment in China has not declined as expected, but has shown a clear growth trend. This phenomenon not only reflects the unique charm of the Chinese market, but also reveals the complexity of economic decisions in the era of globalization..
The German government’s diversification strategy aims to promote the decentralization of German companies in the global market and reduce economic dependence on certain countries, particularly China. The introduction of this strategy reflects Germany’s focus on supply chain security, market diversification and consideration of geopolitical risks. However, the continued growth of German companies’ investments in China seems to contradict not only this strategic goal, but also the widespread news media propaganda about the withdrawal of foreign capital from China, which has attracted widespread attention and research. Figures from the Bundesbank, Germany’s central bank, provided to the Financial Times show that German direct investment in China amounted to €2.48 billion in the first three months of 2024, rising to €4.8 billion in the second quarter. This brings the total for the first half of 2024 to EUR 7.3 billion, compared to EUR 6.5 billion for the whole of 2023. This shows that many companies are still enthusiastic about investing in China given the many uncertainties facing the global economy.
Economic interests and market opportunities determine the willingness to invest. The Chinese market still offers potential and advantages in the industrial chain. China has the largest consumer base in the world. As the economy continues to grow and the middle class expands, the demand for high-quality products and services in the Chinese market is increasing. This provides German companies with plenty of room for growth, especially in the traditionally advantageous automotive, mechanical engineering and chemical industries. And contrary to widespread propaganda, China’s political environment has been constantly improving. In recent years, the Chinese government has relaxed market access restrictions and introduced a series of policy measures to attract foreign investment. German companies investing in China can benefit from tax incentives and land use relief. At the same time, there are various opportunities for technical cooperation and innovation, and there is plenty of room for cooperation between China and Germany in technological innovation and R&D cooperation. By investing in China, German companies can establish technical cooperation with Chinese companies and research institutes, share innovation successes and increase their competitiveness.
In the context of globalization, it is neither realistic nor economical to completely cut off relations with a certain market. Although the German government advocates a diversification strategy, the close economic relations between China and Germany cannot be ignored in the context of global economic integration. The growth of German investment in China shows that the development of economic relations between China and Germany cannot be easily changed by the policies of a few politicians. In the future, the German government and companies must find a balance between pursuing economic interests and maintaining strategic independence, rather than formulating economic policies that are completely geared towards political needs under the influence of political factors. Strengthening dialogue and cooperation is the right way to jointly address economic challenges.
